Ira Artman

What Does Dr. Doom Say About U.S. Home Prices?

John Lounsbury

Thanks for reading and note. Not in this case.

Look at Figures 1 and/or 2.

Last Boomer is using a series that begins in 1991 and ends in 1998. He picks up post 91 weakness and then ends series in 98, well before or just as the market began to revive. So for practical purposes, most of his 91-98 period represents what seemed like a housing bust, for those of us that lived through it, prior to current.

Make sense? - Ira

What Does Dr. Doom Say About U.S. Home Prices?

Dear Last Boomer:

Thanks for reading and note. Your analysis, which constructs a trend by avoiding the bubble, is not bad. If I had to quibble, it would be with your choice of starting year (forced upon you by series you selected, I believe), which is 1991.

Think that was the beginning of recession (from my living memory), so think your trend - beginning as it were,in a recession, could be low due to your choice of start.

But idea of "bubble avoidance" is good one/metric to develop. - Ira

Why Obama Should Terminate All Federal Reserve and Treasury Programs

network.nationalpost.c...

Thanks for comments. Above is link (at Canada's National Post) to transcript of Paul Volcker's comments. Portion (not included in my article) appears below.

Even Paul Volcker, the man who broke the back of US inflation, can't say (at this point) how we get "from here to there." - See below -

What is important is that we have an understanding or conception of what we are aiming at, since only then will we know if we've arrived.

Assuming that (assumption!) that the President is listening to his sole advisor that actually has experience in the taxing business [sorry] of correcting systemic financial failures, then think that we should know what Mr. Volcker is thinking and saying.

Above was simply my attempt (a device) to bring Mr. Volcker's views to your attention in a memorable way.

Hope that it is, or was, successful.

Thanks for reading. Volcker's words below. - Ira
----------------------...

Paul Volcker:
...The system is broken. I’m not going to linger over what to do about it. It is very difficult. It is going to take a lot of money and a lot of losses in the banking system....

So I’ll jump over the short-term process, which is how we get out of the mess, and consider what we should be aiming for when we get out of the mess. That, in turn, might help instruct the kind of action we should be taking in the interim to get out of it.

Is the Economic Recovery Plan Big Enough?

Thanks for comments. Is the stimulus plan big enough?

Here is Op Ed piece in this morning's Feb 6 NYTimes, by Nobel Prize Winner Paul Krugman of Princeton, that agrees with 'Cautious' (and myself):

www.nytimes.com/2009/0...

...Would the Obama economic plan, if enacted, ensure that America won’t have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger.

...And that’s why the efforts ... to make the plan smaller and less effective — to turn it into little more than another round of Bush-style tax cuts — are so destructive...

Bait and Switch: TARP, the RTC and Supervisory Goodwill

AxelRod, JohnL, and Marvin

Thank you for kind comments about what is of much more than theoretical concern to me.

First things first.

THING 1
-----------
I am (possibly unjustifiably optimistically) hopeful that the repercussions of continued mismanagement of bailout are such that there might be a refocusing on things that could work, can be measured, and can be targeted at specific areas.

The idea of a bailout effort that is - by design - unmeasurable as to effectiveness or compliance by recipients describes current TARP, in my humbled opinion.

I would think that it would also be unacceptable to Congress, even if (or because) they approved TARP in its current configuration.

So, Congress might go two ways, and perhaps a little of both.

#1: They might (for want of a better word) "demonize" the TARP recipients, and use the resulting antipathy for the "scoundrels" to limit public outrage when they reshape the industry to their own design.

This was approach used during S&L crisis (see example of Ben Franklin, there are many others).

Advantage of this is that it deflects scrutiny from Congressional responsibility for situation. [Note: I have written article entitled "One at a Time" that discusses Nobel laureate's view that this problem is primarily of Congressional origin.

Link here:

mortgagenewsclips.com/.../

Also, recall that the reason we had a mortgage securitization business was that in aftermath of S&L crisis, balance sheet lending was deemed to be "too risky and costly." So what makes you think that the rediscovery of balance sheet lending as a panacea now is such a great idea, other than it is not (yet) clearly broken?

#2: They might actually come up with targeted and specific programs, that could be deployed.

My guess will be 80% demonization and 20% useful stuff, but that's simply a wild guess. What industry looks like after that - I don't know how anyone can say.


THING 2
-----------
Now, a comment explaining the "much more than theoretical concern" comment at beginning.

I am presently unemployed, and you can see my SeekingAlpha bio or my
LinkedIn profile for background.

LinkedIn Profile here:

www.linkedin.com/in/ir...


I am able to relocate myself anywhere and am looking for work, perhaps in (what's left of) mortgage finance business, or in some other finance-related business.

If any of you folks above, or readers "out there" can assist me in my search, I would be most thankful.

But thanks for reading, kind words, and comments. As I've noted elsewhere on web, in my prior life I built financial models of mortgage transactions, delinquencies, and home prices.

The fact that I can also write sometimes confuses folks, in that they say "Oh, you are looking for a writing job." Not so. I was simply blessed with excellent high school history teachers in public school that forced us how to think and write.

My writing is simply way to unashamedly promote myself and simulate the type of challenges I used to have when I worked for money.

Thanks again for reading and comments. - Ira

California and Florida Housing Outlook: More Hope for Recovery in 2010

Thank you all ffor comments.

If you'd like to see what I proposed for the title of the above, please see my Instablog version, available here:

seekingalpha.com/insta...

A New Proposal: Bank Annual Optional Warrant Acquisition Operation

Note:
The SeekingAlpha "Instablog" version of this same article contains a slightly more evocative title, as well as a compelling opening graphic.

It may be found at the following link:
seekingalpha.com/insta...

Greed, Fear and Loathing: What’s Next for Home Prices?

Thank you all for reading and comments.

Quick comment responding to Charles Lieberman's note that my notion of affordability is suspect because it differs from that produced by the NAR - National Association of Realtors; i.e. people who sell homes for a living.

1. Sure, the NAR is objective - why wouldn't they be?

2. But more seriously - the notion of affordability used by the NAR uses median income (derived by NAR) and median home prices (also by NAR).

I'm using average income, per BLS Census, along with average home price from FHFB.

While NAR uses FHFB rate information as is, they assume 20% down, all the time. I'm using down payment per the FHFB.

Finally, I also make an adjustment to the FHFB reported rates, reflecting the fact the dislocation in non conforming markets (i.e., requirement that borrowers have relatively spotless credit, currently) has made mortgage credit somewhat scarce for those with imperfect credit histories.

Think that - IMHO - the NAR is a "best case" figure, for reasons that I snarkily suggested above, and that mine is more realistic. Think the NAR - by definition - assumes the problem away and then proudly reports that there are no problems.

Well, .... sure, but ...

A Bimodal, Metrocensual Model of Foreclosures

User 68420 - Thanks for reading, and sorry that you missed the definition which appears early on in the piece. I've reprinted it below (or see above), reformatted for emphasis. - Ira

"To build a simple and rough:

bimodal
[two factors, home prices and unemployment]; and

metrocensual
[metro area, determined by US Census Bureau]

model of foreclosures."

Housing Indexes - When Will the Fed Get Smart?

Thanks for comments.

The S&P Case Shiller Index that I am using is NOT the 10 MSA or 20 MSA version, which I believe that Tom Armistead is referencing. It is the "S&P Case Shiller National Index", as noted in post and in link that refers to S&P website. - Ira

Rethinking Future Home Price Declines

Thank you all for comments. On topic of "Is real housing return zero", you might want to check out Professor Shiller's long term view. Link is above, but will repeat it below. - Ira

tinyurl.com/professor-...

John Taylor Clears the Way for an Informed View of the Financial Crisis

Thank you all for kind words.

With respect to what the new Administration needs so it will not continue or repeat prior policy mistakes, I believe that the answer is simply - wisdom and the courage of their convictions.

If they are lacking in either or both, then I'm not sure why we bothered to hold last fall's election.

Bait and Switch: TARP, the RTC and Supervisory Goodwill

Thanks rkruse53 for comment.

As to "startling", read the linked reference to Benjamin Franklin Savings that appears in my article [I've repeated it below].

It is just an example of what happened before, in - I think - distressingly similar circumstances. There are many examples.

Thanks for reading.

en.wikipedia.org/wiki/...

Bait and Switch: TARP, the RTC and Supervisory Goodwill

Note: For those that DIDN'T see the movie, when Oliver/Mark Lester holds out his empty bowl, he asks:

"Please sir, I want some more. "

as noted below:

Oliver Twist: Please sir, I want some more.
Mr. Bumble: [thinking he must not have heard right] What?
Oliver Twist: Please sir, I want some...
[pauses hesitatingly]
Oliver Twist: more?
Mr. Bumble: [surprised beyond belief] More?

www.imdb.com/title/tt0...

I think that the Congressional reaction will be similar to that of Mr. Bumble, and Congress could put a halt to the use of TARP as it was used in '08.

If it does, then TARP recipients could be expected to do as well as S&L's with goodwill, when the goodwill was disallowed by Congress in 1989's FIRREA legislation. [They failed.]

But we shall see.

Jumpstart Spending With a National Housing Lottery

Thanks for comments. Sadly, the article IS serious. Here is why.

1. The unfairly criticized (of late) for Chairman Greenspan has demonstrated the power of (for want of better word) "greed" when he mobilized borrowers' self interest to create a spending machine that drove the US economy, even though household incomes were stuck.

2. If people are among those that can afford to buy lottery tickets, then it is NOT irresponsible to afford them that pleasure.

3. While greed may be gone, fear is everywhere.

4. Money - if spread around widely[!] among the fearful in an unaccountable way (i.e., TARP) will not work. So it would seem.

5. This proposal is for a targeted and modest plan (relative to the $750B TARP) to harness what has worked in the past (gain-seeking "greed"), rather than administer more of what hasn't.

6. In that context, what is so fantastic or ridiculous about the above.

7. What is ridiculous is the following:

"Hello. I'm from the government, and I will be spending $700 B of your money. Once it is distributed, I will have - by design - no way to tell what the money is being used for, or even if it has been used at all. If it is simply hoarded, there will be no way for me to monitor or to hold the hoarders accountable."

That's ridiculous. Or to put it another way.

8. When there is a gas shortage or a hurricane, states have the ability to impose anti-gouging laws against vendors who charge "too much."

It would seem[!] that we now have a capital shortage. Yet the folks who won't even gouge, because they are hording their (formerly our, i.e., the taxpayers') scarce resources face no penalty for their inaction.

That's ridiculous.

PS: Thanks for reading. - Ira